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SXSW Day 4: 'Allowing the merger of Ticketmaster and Live Nation was pretty immoral'

March 20, 2010 | 2:44
pm

As industry conference and festival South by Southwest enters its home stretch, independent label heads such as Matador's Gerard Cosloy and Domino's Kris Gillespie raised concerns about the recent merger of Ticketmaster and Live Nation, and they also spoke on the ever-controversial, all-encompassing 360-label deals.

"Allowing the merger of Ticketmaster and Live Nation was pretty immoral," Gillespie said at the start of a state-of-the-union panel, becoming a voice of opposition from the independent community. The recent formation of Live Nation Entertainment will put promotion, venues, management and ticket sales under one roof, creating a mega one-stop-shop for the record industry. Though much of Live Nation Entertainment's business is at the arena and amphitheater level, Gillespie and Cosloy laid out how the partnership can affect and alter the underground community.

"They don't want to be a partner with the labels in selling tickets," Gillespie said. While he noted that Domino has zero interest in entering the ticket business, the live concert industry is one of the few areas of growth in the indie community. "We're selling more concert tickets for our artists than CDs," Gillespie said. "It really is a problem."

Concert tickets for artists on Matador and Domino cost far less than the multi-hundred dollar seats for the Eagles, but they're still greater than the cost of a digital album download. Additionally, Cosloy noted that recent albums from Sonic Youth and Yo La Tengo failed "to sell as many copies as we would have liked," but ticket sales were strong. Tickets, he added, weren't exactly cheap, and then were saddled with service charges that ranged between $10 and $20.

It caused the band and label to change its approach, opting to hit venues that aren't locked-in with Ticketmaster deals to avoid surcharges. Said Cosloy, "This spring, they only played shows if there was no ticket charge.... It completely changed the complexion as to what kind of venues they were going to play. It worked out all right, but they had to make a great sacrifice to make it affordable."

Gillespie chimed in, saying the label would rather see fans paying for a $6.99 download than a $10 service charge. Ticketmaster has long been vague on how precisely its service fees are distributed, although congressional hearings in 2009 revealed that a percentage of each fee goes to the venue, promoter or artist.

"We see it as an opportunity," Gillespie said of fan's continued willingness to spring for concert tickets, and noted that labels are expected to front costs for tour promotion and marketing, and then receive zero cut of the tour.

"There's a burden that's on us to be doing ticket buys, manufacture display materials and send stuff out. We don't make any more on those shows," he said. "It's a hidden economy that we don't make any money on."

Said Cosloy: "And you're being very diplomatic."

Ultimately, Gillespie said, it's about access, and as the business consolidates, that gets harder to achieve. "All the labels are locked out of that business and unable to participate," Gillespie said. "It's not about getting into the ticket business. It's about communicating."

Though some major labels have attempted to get into the merch and ticket business by signing artists to so-called 360-deals -- a pact to receive a cut of nearly every aspect of an artist's revenue stream -- Cosloy said Matador would not go down that route, a sentiment that Kill Rock Stars head Portia Sabin echoed.

"I don't think they're unethical," Cosloy said. "My gripe is that it's not our field of expertise. Our job is to put out records. We have no history of making T-shirts. We're not a black light poster company. If we want to get in that business, we need to get our hands dirty and gain some expertise."

Los Angeles' own Dean Spunt of No Age was also on the panel. He said his band, which is signed to Sub Pop, was presented with multiple 360-options from other labels. "I've been offered a 360-deal and seen it on paper," he said. "You feel as if you're being kicked in the nuts. It's really disrespectful when you see it laid out."

Other notes from the indie music panel:

The end of the Rock Band/Guitar Hero era? Labels may not be able to count so much on revenue from licensing to video games in the future. Gillespie said the business has shifted to the download arena, meaning labels are no longer getting up-front money. "All the front end costs they used to pay for will now be paid by the labels," Gillespie said. "People are getting smart about this." Said Cosloy, "The argument is that it's terrific exposure, and we should be happy with it."

Tip from a label head: If you're in a band with a significant other, you may wanna forgo those rock star dreams. When asked by an audience member as to what the label execs are looking for/not looking for in an artist, Sabin had a ready answer. "Do not signbands who
have members who are dating. Lesson learned."

And now a brief rant (I'm allowed: I'm tired and it's the last day of SXSW.): The industry panels at SXSW are sparsely attended (I have provided photo evidence), and that's a downright shame. More writers and bloggers than ever attend SXSW, but the tough questions and important issues are largely going undocumented, as the media instead is flocking to day parties with free booze and free food. But hey, I suppose Surfer Blood is playing 10 shows (10 shows! Crazy!), and someone needs to document them all. There are a few exceptions, of course.